News In Focus
7 December 2005
A-Day U-turn sparks lawsuit threat
The Treasury was being threatened with legal action yesterday by private investors angry at the Chancellor's decision to scrap plans to allow people to add a range of new assets to their pension funds from next April.
Gordon Brown's announcement in Monday's pre-Budget report means that individuals will not, as previously enacted, be able as from 6 April 2006 to claim tax relief by purchasing residential property, works of art, fine wines or similar assets with investment value through a self-invested personal pension (SIPP).
Many articles have been written in recent months encouraging people to prepare to take advantage of the proposed rules, and one investment manager claimed that thousands of hours of professionals' time offering advice had now been wasted, costing clients dearly.
Another warned that investors who had committed themselves to purchases in anticipation of tax breaks when the deal completed could now find themselves with assets that they have difficulty financing.
Fears had been expressed that the new rules would lead to a further property boom, pricing houses out of the reach of first time buyers and those in rural areas as people looked to invest in second homes. However fund managers claimed that the changes were having a positive impact on perceptions of pension saving at a time when it is widely predicted that the public are making inadequate provision for retirement.